Construction Price Escalation Clauses in Ontario

Identify: specific products, commodities, equipment, transportation or labour classifications. Attach a schedule where possible.

Avoid: “all costs,” “market conditions” or “any supplier increase” without limits.

Identify: the supplier quotation, wage rate, index, exchange rate or published price used in the contract amount.

Record: quote number, supplier, product, quantity, unit price, validity period and date.

Examples: newly imposed tariff, tax change, manufacturer increase, collective-agreement wage increase or specified index movement.

Exclude: ordinary estimating errors, missed scope, rejected discounts and predictable seasonal pricing unless expressly allocated.

State: when protection begins and ends—for example, from the contract date until the required purchase date.

Clarify: whether the clause ends if the contractor misses an agreed procurement deadline.

Purpose: the contractor absorbs ordinary movement and only defined extraordinary increases trigger adjustment.

Define: whether the owner pays the whole increase after the threshold or only the amount above it.

Show: baseline quantity × verified unit increase, less credits, savings and excluded causes.

State: whether freight, exchange, tax, waste, fee, HST and subcontractor markup enter the calculation.

Cap options: fixed dollar amount, percentage of affected category or percentage of the original contract price.

State: what happens when the verified increase exceeds the cap—builder absorption, substitution, scope change or owner termination right.

Require: prompt written notice after the contractor becomes aware of the increase and before committing to the higher cost where practical.

State: the consequence of late notice, including loss or reduction of entitlement where appropriate.

Require: original quote, revised quote, invoice, purchase order, tariff notice, wage schedule or published index.

Separate: supplier-wide increase from a price caused by the contractor ordering late or changing vendors.

Require reasonable steps: timely purchasing, alternate quotes, approved equals, split deliveries and avoidance of unnecessary premium freight.

Protect quality: mitigation does not permit unapproved substitutions or reduced performance.

Possible choices: approve the increase, select an approved alternative, delete the item, delay purchase or terminate affected work.

Include: resulting schedule, restocking, design and coordination consequences.

Fair symmetry: if verified prices fall below the baseline before purchase, the owner receives the defined credit.

State: whether the same threshold, fee and calculation apply to decreases.

State: whether an agreed fee applies to the verified net increase, and whether subcontractor markups are already included.

Avoid: percentage on tax, duplicate overhead, fee on unsupported charges or markup on another undisclosed markup.

Exclude: increases that would not have occurred but for contractor delay, missed purchasing deadlines or failure to follow the agreed schedule.

Address owner delay: define how late selections or financing delay affect price protection.

Require: calculation, evidence, schedule effect and signatures through the contract’s change process before billing where practical.

Coordinate: proper invoices, payment milestones, lender approval and statutory holdback where applicable.

Provide: record access, time to review, payment of undisputed amounts and the agreed dispute-resolution route.

Preserve: statutory remedies that cannot validly be waived.